Chicago property law does not end redlining impact, according to reports

A nearly 80-year-old law intended to put distressed and tax-delinquent Chicago-area properties back to productive use has done little to improve or solve racial inequities in the city’s Black and Latino neighborhoods, according to a study.

A report released Tuesday by the Cook County treasurer’s office proposes scrapping or modifying Illinois’ Scavenger Sale law in favor of tax-cutting and other programs that may allow homeowners of color to accumulate generational wealth.

Other recommendations include making lists of available property open to the public, pushing for legislation lowering the interest rate applied by Cook County to delinquent property tax payments and allowing property owners to make partial payments to satisfy tax liens.

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“The biggest problems are the liens on the property,” said Hal Dardick, the study’s author. “By the time (properties) get to the sale, many are delinquent, decaying. You have to pay the taxes when you don’t even own the home.”

Treasurer Maria Pappas expects the study to be filed in the coming weeks with the county board and shared with the state Assembly and Gov. J.B. Pritzker.

The study lays blame for the deterioration of many neighborhoods of color and the exodus of Blacks from Chicago on federal and banking policies called redlining, the practice of banks discriminating against racial minorities or certain neighborhoods.

Last October, the Justice Department announced a cross-government effort to investigate and prosecute redlining.

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The Scavenger Sale law was meant to be “a solution to redlining, but it didn’t work because it didn’t solve redlining and the underlying lack of generational wealth” among Black families, Pappas said.

After home foreclosures spiked during the Great Depression, the federal government revamped mortgage lending laws in an effort to prevent future economic crises.

The now-defunct federal Home Owners’ Loan Corp. drew up “security maps” between 1935 and 1940 that graded the prospects — from best to worst — of mortgage lending in 239 cities across the United States. Areas deemed high lending risks were drawn in red and most often were majority Black neighborhoods.

“Vast numbers of vacant lots, abandoned homes and boarded-up businesses in minority neighborhoods lie in areas where the U.S. government had discouraged mortgages,” the Cook County study says.

Under the Illinois’ Scavenger Sale, which was started in 1943 by the Illinois General Assembly, properties with three or more years of unpaid taxes over a 20-year span land on the auction list.

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Of the 27,358 houses and vacant lots offered at the county’s 2022 Scavenger Sale, 14,085 fell within the boundaries of a security map of the Chicago area. Most of those 14,085 properties were redlined, the study’s data shows.

More than 72% of the 27,358 properties were in predominantly Black wards and suburbs. Only 7,636 received bids.

The Scavenger Sale has proved inadequate in restoring distressed properties in communities that have long suffered from housing discrimination, from redlining to scant mortgage lending and below-value mortgage appraisals in minority communities, according to Pappas, who called it frustrating for residents.

“You end up giving up because there is no easy route to success,” she said. “You’re exasperated, and for African Americans who are already discouraged by what’s happened in their neighborhood it’s doubly defeating. It becomes generationally defeating. There is nothing to pass on to the grandkids.”

The study also looks at similar patterns in Detroit, Philadelphia and other cities.

In Philadelphia, about 82% of 6,167 publicly available properties within the boundaries of that city’s federal lending map and held by the Philadelphia Housing Development Corp. were redlined.

Of the more than 75,500 distressed properties held as of April by the Detroit Land Bank Authority, nearly 71,500 were in federal Home Owners’ Loan Corp. mapped areas. The Cook County study found that 23,967 — about 33.5% — of those properties were redlined.

“The impact (of redlining) is what you can still see today,” said Anika Goss, president and chief executive of Detroit Future City, a nonprofit tasked with implementing a 50-year framework for the city.

“It’s not just housing and commercial redevelopment, but also infrastructure redevelopment,” Goss said. “These are places that have been blighted for many, many years — where the infrastructure is extraordinarily poor. You can see vulnerable lighting, poor streetscapes, poor sidewalks — all the things that make up a neighborhood of value.”

Detroit has demolished more than 20,000 houses and other structures since 2014 and, along with its Land Bank Authority, has been aggressive in making homes and land available to people wanting to move into the city or already living there.

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About 21,000 side lots have been sold to residents, putting the land back on Detroit’s tax rolls, according to John Roach, spokesman for Mayor Mike Duggan.

Nearly 16,000 structures have been auctioned or sold through programs. There’s also a buyback program that allows people living in a house going through foreclosure to receive the deed for $1,000 and remain in the home.